New York (AFP) – The New York Stock Exchange ended lower on Wednesday, hurt by several poor economic indicators, which, on the other hand, benefited the bond market, reassured by the lull on the inflation front.
The Dow Jones fell 1.81%, the Nasdaq index fell 1.24% and the broader S&P 500 index fell 1.56%.
“We had gone up too much” too quickly, commented Maris Ogg, of Tower Bridge Advisors. The Nasdaq thus remained on a series of seven positive sessions in a row, interrupted on Wednesday.
“People started thinking there would be no recession, and today’s numbers show we’re getting there,” the analyst added.
The reversal of the indices, which had opened higher, is thus attributable to the fact that “investors have digested a wave of indicators and mixed company results”, according to analysts at Schwab.
Industrial production fell significantly more than expected between November and December in the United States (-0.7% once morest -0.1% expected by economists).
Another unpleasant surprise was the decline in retail sales (1.1%) in December at a faster pace than expected (-1% expected). Excluding car sales, the contraction is much stronger than expected (-1.1% once morest -0.5%).
The ray of sunshine came from the producer price index (PPI), or wholesale price, which fell 0.5% in December compared to November, much more than expected by economists (-0 ,1%).
This is the strongest contraction since April 2020, in the early days of the coronavirus pandemic. Year on year, the pace fell to 6.2%, the most moderate since March 2021.
For Peter Essele of the Commonwealth Financial Network, the US central bank has succeeded, thanks to its monetary tightening, in curbing the rise in wages, consumption and wholesale prices, which means “only rate hikes in the second half of 2023 are excluded as is. That means the bond party is regarding to begin.”
In fact, bond rates fell sharply on Wednesday. The yield on 10-year US government bonds fell to 3.36%, once morest 3.54% the day before closing, its lowest level in four months.
Yields move in the opposite direction to bond prices, which means US Treasuries prices have risen.
For Maris Ogg, “the bond market has been racing” for a few weeks. “People aren’t being realistic when they imagine what the Fed is going to do,” she said, referring to projections for rate cuts in the second half of the year.
“Unless we have a brutal economic slowdown, which is unlikely, I don’t see why she would lower rates this year,” insists the analyst.
Despite the meltdown in bond yields, which often ordinarily benefits them, technology stocks retreated on Wednesday.
In the lead, Microsoft (-1.89% to 235.81 dollars), which paid for the announcement, just before the opening of the Stock Exchange, of a social plan which will lead to 10,000 layoffs, or just under 5 % workforce.
The firm of Redmond (State of Washington) justifies its decisions by the need to adapt to “macroeconomic conditions and changing priorities of customers”.
This wave of job cuts will generate an exceptional charge of $1.2 billion in the last quarter of 2022.
But the purge was not limited to the new economy. All members of the Dow Jones thus ended in the red, with a special mention for IBM (-3.29%), Procter & Gamble (-2.68%) and JPMorgan Chase (-3.00%).
Even United Airlines (-4.57% to 48.86 dollars) might not extricate itself from the slump despite the publication of better-than-expected results as well as ambitious forecasts for 2023, noting that demand remained strong despite the rise in prices. prices.
Among the few shares on the rise, the Moderna laboratory (+ 3.32% to 197.02 dollars), which capitalized on the announcement of positive preliminary results of its vaccine once morest respiratory syncytial virus (RSV), responsible for bronchiolitis in the elderly.
© 2023 AFP
